In the half decade since I flew the corporate coup, I've watched the 401(k) plan balance I accumulated during nine plus years of professional employment bob and weave between $80,000 and $102,000. I don't check it often (I was trained well) but when I have peeked in on my restless nest egg, it's anything but the same -- 10 years of contributions and employer match adrift on the financial seas. A rudderless ship. The crew drunk with hubris.
Just before 2013 waved to us from the docks, I decided it was high time I position myself at the helm and exert more control over my retirement savings rather than continue to acquiesce to unseen Wall Street power brokers and mutual fund managers. It's high time I alone am the cause of my treasure chest's market value fluctuation. It's high time I invest some of those volatile dollars in real human opportunities instead of the profit potential of companies with which I have no tangible relationships. It's high time I retire a little bit now, in my mid-thirties, while happy, healthy and with a loving wife and two young children who are as game as I am for family adventure. I decided to take $6000 out of my 401(k) balance to have a once-in-a-lifetime experience with the people I love most in this world. And I suggest you consider doing the same.
What is $6,000? What does that amount of money mean now and what might it mean in 25 years time? That's the question I asked myself when faced with the opportunity to sit alongside my three favorite women and watch, in person, my beloved Michigan State Spartans football team play in the Rose Bowl Game for the first time in a quarter century. And it was the 100th Rose Bowl Game too. I may never get the chance to scream back "Go White!" to my kids' "Go Green!" in the famed Pasadena stadium again. Dads who in 1988 passed up their chance in the present for a future shot at that same experience, when money might be more plentiful or schedules more accommodating...well, those fathers may no longer be with us. Time waits for no one. You're given a singular chance to live for today and I wasn't about to turn it down to keep $6,000 invested for something unknown later on down the line.
While on the West coast trip built around three and a half hours of college football, we also had the unique opportunity to stand in awe of the Grand Canyon, to look up in wonder and find Orion's belt in the brilliant night sky in the pitch black middle of Joshua Tree National Park, to scale the jaw-dropping red rocks in the Valley of Fire, to travel down into the Hoover Dam power plant, to sit and watch the 125th Tournament of Roses Parade, see The Beatles LOVE Cirque du Soleil show in Vegas, and to ring in 2014 with faraway friends from the kindie rock world in the construction brick kingdom of Legoland. When else might the stars align in such a way as to allow my children to spend a warm Dec. 31st riding rides beneath a shower of fireworks, surrounded my minifigs, while smiling hand-in-hand with friends they rarely get to see, all while listening to the best all-ages hip-hop and rock-n-roll being made in this the golden age of family music? Will these experiences be of interest and available to them, to us, in 2039? No, they won't. Circumstances will change beyond recognition in the next quarter century, with new families sprouting, births and loss. All of those moments were available to us now, together. Happy and healthy and in love with the world. And I wasn't about to turn it down.
If left untouched, would that $6,000 still be $6,000 in 25 year's time? Honestly, it would probably be considerably more. Such is the nature of compounding and the historical long-term strength of the U.S. markets. But could more scandals and bubbles and, god-forbid, additional terrorist attacks derail the fragile economy built on hefty deficits, shaky promises, and consumers living beyond their means on the backs of high-interest credit cards? Maybe. Taking my present, my family's future, and the uncertainty of the economy, let alone the world at large, into account, I got real comfortable, real quick with the idea of pulling $6,000 worth of hot air out of my retirement savings balloon today to invest in myself, my family, and in childhood memory making.
To go about this, I will first withdrawal and close my two Roth IRA accounts. I half-heartedly contributed $800 a decade ago and the balances have grown to near $1,500 total. Since seed money in a Roth IRA isn't taxable and will face no penalty, that's first to go. Next, I'll dip into my 401(k) money that I've since rolled over into a traditional/rollover IRA to make it more easily accessible. I understand that paying a 10 percent tax penalty sucks but not experiencing what I did and not investing in the childhoods of my two daughters would have sucked worse. That's the kind of math that makes sense to me now.
This unconventional fiscal strategy isn't for everyone. I need to be clear on that point, and before doing anything similarly you'd best consult a tax professional. It is risky, the idea of having less money for expenses, medical and otherwise, at the end of your working life, but I argue for the worthiness of such a risk. If you believe in the long-term health of the economy, you'll likely recover, over the course of decades, some, if not all, of the money withdrawn and the taxes and penalties you would have paid. That's why this "retire now (a little bit)" plan only works in small bursts and should be reserved for special opportunities above and beyond what you'd consider normal occurrences. Meaning, don't think of your 401(k) as a vacation club account at your local credit union. It's not that. Also, anyone already living beyond their means on a day-to-day basis, with excessive amounts of debt on their heads, should probably not be tapping into their financial nest egg(s) for discretionary experiences.
But, even with all that said to qualify my argument, if you someday find yourself in a position of relative financial strength, such as I was, and have the chance to make a lasting memory or 10 with your family, do it.
Do it.
